Climate Cap-and-Trade Schemes as Corporate Welfare

Yesterday, the Goracle (as Dana Milbank of the Washington Post affectionately refers to him), otherwise known as the former Vice-President, Nobel Peace Laureate, and Oscar-Winner Al Gore, testified before a Senate committee on the dangers of man-made global warming. Among other things, Gore told the committee:

If Congress acts right away to pass President Obama's Recovery package and then takes decisive action this year to institute a cap-and-trade system for CO2 emissions - as many of our states and many other countries have already done - the United States will regain its credibility and enter the Copenhagen treaty talks with a renewed authority to lead the world in shaping a fair and effective treaty. And this treaty must be negotiated this year. Not next year. This year.

Gore was talking about the United Nations' global warming treaty negotiations that are supposed to be wrapped with a new agreement at the end of this year in Copenhagen, Denmark. Currently, the treaty negotiations aim basically at extending the cap-and-trade model of the earlier Kyoto Protocol. People who are concerned about global warming should seriously rethink their support of cap-and-trade schemes. As the Guardian explains, Europe's emissions trading scheme (ETS) is very profitable for some corporations:

Britain's biggest polluting companies are abusing a European emissions trading scheme (ETS) designed to tackle global warming by cashing in their carbon credits in order to bolster ailing balance sheets.

The sell-off has helped trigger a collapse in the price of carbon, making it cheaper to burn high-carbon fossil fuels and leading to a fall in the number of clean energy projects...

"This [ETS] was not designed as a scheme to give corporates cheap short-term funding options in the face of a credit crunch meltdown where banks are not lending, but that appears to be what's happening," said Mark Lewis, a carbon analyst at Deutsche Bank.

Really? Lewis and environmental activists exhibit such charming naivete, don't they? The Guardian continues:

The sell-off of the pollution permits has led to carbon prices plunging 60% – from over €30 to around €12 per tonne.

The EU's emissions trading scheme was set up as a market solution to cut greenhouse gas pollution from industry. Polluters were issued with permits that can be traded between companies and countries as a way of encouraging an overall reduction in carbon output. However, companies are now cashing them in for their own financial benefit...

A study commissioned by the WWF environmental organisation from Point Carbon, published in March last year, estimated that "windfall profits" of between €23bn (£21.4bn) and €71bn would be made under the ETS between 2008 and 2012 on the basis that the price of carbon would be between €21 and €32. Up to €15bn could be made by British companies that were given credits they did not need.

Earlier this month, the U.S. Climate Action Partnership, a group of coporations and national environmentalist organizations, released their proposal for a similar cap-and-trade scheme for this country. As I reported, this coalition of Climate Change Baptists and Bootleggers favors giving out at least some emissions permits for free. As a 2007 report from the Congressional Budget Office pointed out:

...giving away allowances could yield windfall profits for the producers that received them by effectively transferring income from consumers to firms' owners andshareholders.

Interestingly, Sen. Bob Corker (R-Tenn.) suggested to Gore during the hearing that a better proposal would be to impose an across-the-board carbon tax which would then be reimbursed entirely by cutting the payroll tax. However, it's hard to imagine Congress being able to resist keeping its hands off of any such new revenue stream. 

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  • Naga Sadow||

    (sigh) Bad day already . . . anyways I'm a little surprised they would give em away. As Bailey states "it's hard to imagine Congress being able to resist keeping its hands off of any such new revenue stream".

  • sage||

    And this treaty must be negotiated this year. Not next year. This year.

    Because otherwise the global temperatures will rise...how much in the next 50-100 years? And how much would they rise if we did nothing? If these climate scientists can see 1,000 years into the future, they must be able to answer these questions with some amount of accuracy before we spend hundreds of billions of dollars that could do more good elsewhere.

  • Naga Sadow||

    sage,

    If this isn't combated now white people will melt!

  • SIV||

    temperature changes that "would bring a screeching halt to human civilization and threaten the fabric of life everywhere on the Earth -- and this is within this century, if we don't change."

    Is a screeching "halt" an end of civilization?
    Or does Al think civilization is "evolving" and the process will stop?

    The former is alarmist nonsense while the latter is based on some premise of WTF? is he talking about.

  • z||

    If you believe that carbon needs to be curtailed (what about methane?), then I don't see a better solution than Corker's tax and rebate idea.

  • short, fat bastard||

    Carbon taxes do not provide a means for the important people in government to directly control the behavior of the sheeple under the jurisdiction of government.

  • ||

    We need to do something about Al Gore. Not next year. This year.

  • Kyle Jordan||

    Serious question here everyone...

    Is it even worth getting worked up over all of this anymore? Have we lost?

    Shit, everyday on this site it's more bad news. And on top of that, the bad news is getting worse. Honestly, I don't know if I have it in me anymore to care because it just seems that the fucking inmates are running the asylum.

  • \"libertarians\"||


    Shit, everyday on this site it's more bad news.


    Obama is the President now.Not enough good news for you?

  • Naga Sadow||

    Kyle,

    Don't slap me down for this but . . . hope?

  • ||

    Have we lost?

    The implication of there having ever been any possibility of winning is probably inappropriate. But yes.

  • ||

    naive?!?

    who was it that kept chanting.."cap n trade is the free market solution to global warming, don't you want market based solutions?"


    regardless, I'm happy to see you waking up to the scam, nice article!

  • ||

    Bailey: There are rumors flying around that Gore either has or will make tens of millions on cap and trade schemes. Is there any truth to that?

    Kyle: Take heart. Global coldening will save us.

  • Jordan||

    "This [ETS] was not designed as a scheme to give corporates cheap short-term funding options in the face of a credit crunch meltdown where banks are not lending, but that appears to be what's happening," said Mark Lewis, a carbon analyst at Deutsche Bank.



    Awesome. Also, fuck Mark Lewis.

  • ||

    If Congress acts right away to pass President Obama's Recovery package

    Wouldn't that be the worst thing that Congress could do? Wouldn't an economic slowdown also reduce the rate of our CO2 emissions?

    Why is Al Gore asking Congress to pass legislation that will increase CO2?

  • ||

    Gabe: You must have me confused with some other Ron Bailey who has apparently supported cap-and-trade schemes. I have not.
    See my article "Carbon Taxes vs. Carbon Markets."

  • TallDave||

    Ron, have you seen this over at the Science Blog of the Year?

    It has been an interesting couple of days. Today yet another scientist has come forward with a press release saying that not only did their audit of IPCC forecasting procedures and found that they "violated 72 scientific principles of forecasting", but that "The models were not intended as forecasting models and they have not been validated for that purpose."
    ..
    Today, a founder of the International Journal of Forecasting, Journal of Forecasting, International Institute of Forecasters, and International Symposium on Forecasting, and the author of Long-range Forecasting (1978, 1985), the Principles of Forecasting Handbook, and over 70 papers on forecasting, Dr J. Scott Armstrong, tabled a statement declaring that the forecasting process used by the Intergovernmental Panel on Climate Change (IPCC) lacks a scientific basis.

    Ouch.

  • ||

    Man, this is the fourth shameful thing Corker has done in almost a week. I'm ashamed to have him as my senator.

    First, he sucked Hillary's dick at her confirmation hearing

    Second, he voted to confirmed the admitted Tax cheat Geitner as Treasury Secretary

    Third, he paid tribute to the Goracle at his Senate hearing

    And Finally, he suggested a government carbon tax scheme, which unlike cap and trade, would make all companies equally poor instead of enriching a few, which would be a least better for the economy.

    I'm starting to wonder if Ford wouldn't have been a better choice. At least he was honest.

  • economist||

    If they actually stuck to the payroll tax reimbursement, I could see this as a reasonable hedge against the possibility of AGW.

  • economist||

    That said, I have about as much confidence as Ron that the government would actually deny itself more revenue.

  • economist||

    Pantera,
    I gather that you are in Tennessee. I spent a year in Chattanooga, back when Corker was mayor. I'm not terribly surprised.

  • ||

    Cap and trade is obviously what I think it is: A way for the government to rack up some ill-gotten millions and a captive market to be run by the big investment banks. The bubble-possibilities of this scheme for the Connected Ones to skim off of is staggering. Reminds of weather-future contracts at Enron, shit like that. Maybe we could work some CDO-type thing with carbon credits?

    The other stinker here is how the government apportions these stupid permits. Gold money is money because not everyone can acquire a pile of gold so easy. But getting carbon out of the air? Kinda easy. Like I was saying in a previous post, if I plant a couple thousand trees on my ranch in Montana, why in ten years I'll be carbon-negative by hundreds of tons every year. Why can't I mint some carbon credits and sell them as a result of that?

    This thing is just total bullshit. Al Gore's worried about C02 because he's obviously spent a lot of time in a closed garage with a running car. I'd be scared of C02 as well, I guess.

  • Mike Laursen||

    Ronald, every time you write an article promoting the idea of a carbon tax, I bring up the same problem: once the carbon tax is ensconced as a major source of government revenue, how would we keep politicians from losing track of the original purpose of the tax? Wouldn't taxation levels tend to become determined by how much revenue they bring in rather than how much they help the environment? I don't think you've ever addressed this criticism.

  • ||

    "Ronald, every time you write an article promoting the idea of a carbon tax, I bring up the same problem: once the carbon tax is ensconced as a major source of government revenue, how would we keep politicians from losing track of the original purpose of the tax? Wouldn't taxation levels tend to become determined by how much revenue they bring in rather than how much they help the environment? I don't think you've ever addressed this criticism."

    Yeah Ronald. What about a scheme of tax-deductions for sequestering carbon? Get pro-active about reducing it from the ground-up instead of trying to fix the amount from top-down?

    I really think trees are a kind of answer here if CO2 reductions are the goal. I mean they're everything the bleeding-green edge likes:

    They sequester carbon from the air into the ground.

    They're self-replicating nano-machines (from seed to tree) and are basically free.

    They're solar powered!

    They're literally quite green, each one is its own little ecosystem and promote biodiversity in a given habitat.

    They control erosion.

    Anyone can plant one. No Department of Trees needed.

  • ||

    My ppologies Ron, I forgot which type of tyrant you were. You have been pushing for carbon taxes for over a year.

    The pro- global carbon taxes administerd by international authorities are actually more disgusting than the pro-corporate welfare "cap n trade" folks.

    I still find it ironic that a fan of global carbon taxes can work up the gumption to call the pro-corporate welfare folks naive.

    This is like watching a debate between Darth Vader and Jabba the Hut. Darth Vader of course being in favor of universe wide CO2 taxes and the authority that goes with implementation while Jabba the Hut is merely trying to scam the public out of some additional pork.

  • ||

    Gabe: Where did I come out in favor of "global carbon taxes administerd by international authorities"?

  • ||

    Mike Laursen,
    You cynicism is not appreciated. The ground has shifted beneath you. The governemnt would never use this revenue for anything but what was intended by the most earnest environmentalist. We must all work togetehr if we are to save our civilization from the immenent dangers of global warming. Your either with us or your against saving humanity.

  • ||

    Mike Laursen: An excellent criticism! I have actually been researching this topic and will report back my findings soon.

  • Mike Laursen||

    Suck it, OBAMA. My Prius shields me from all guilt trips!

  • ||

    "Another advantage is that the tax could be phased in to poor countries once average incomes reach a certain threshold. For example, carbon taxes might start to kick in when national income reaches $5,000 per capita, slightly higher than China's current level."

    Ron,
    When you stated the above, I took it to mean that SOME entity as imposing taxes ont eh poor countries. If you meant that "the poor countries could raise their own co2 taxes whenever they wanted" it certainly didn't come off that way.

    The trade treaties have created courts which have diminished countries abilities to lower their own taxes...all under the guise of "fighting unfair trade practices"...once a few more of the international bodies are created by ceding national sovereignty then the goals of hundred of world government cheerleaders will be much easier to put in place.

    Do you really believe for one second that the government is looking out for the best interest of the people AND that is why they want CO2 taxes? if so then you are every bit as naive as the people who think cap-n-trade is anything more than corporate welfare.

  • Kyle Jordan||

    "Your either with us or your against saving humanity."

    Ok, NOW it's time to start fuckin' shooting!

  • ||

    Hey Kyle,
    What are you wanting to shoot at?

  • Kyle Jordan||

    Spit wads at the air. It makes the voices go away. For a while...

  • ||

    see you in the FEMA camps Kyle, I'm putting you on the list.... I PLEDGE!

  • ||

    What if the permits are issued to land trust holders on the basis of how much carbon the flora sucks out of the air?

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